Morland Company started year 1 with $75,000 in its cash and accounts. During year 1, Morland paid $50,000 cash for employee compensation and $17,500 cash for materials.
Required
a. Determine the total amount of assets and the amount of expense shown on the year 1 assuming Morland used the labor and materials to make 1,500 chairs. Further, assume that Morland sold 1,200 of the chairs it made. State the name(s) of the expense account(s) shown on the income statement.
b. Determine the total amount of assets and the amount of expense shown on the year 1 assuming Morland used the labor and materials to provide dental cleaning services to 500 patients. State the name(s) of the expense account(s) shown on the income statement.
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